Money mule accounts are an alarming but growing tool used by fraudsters to move stolen or illegal funds across borders, while avoiding detection. For anyone unaware, a “money mule” is a person who allows their bank account to be used by criminals to transfer money. This might sound like something that could only happen to people involved in criminal activity, but often, it’s unsuspecting individuals who fall into this trap.

How Do Money Mule Accounts Work?

A money mule is a person who allows their bank account to be used to transfer illegally obtained funds on behalf of a third party. Typically, criminals will approach potential mules with an attractive offer: a chance to earn easy money by simply allowing funds to pass through their bank account. While this may seem like a legitimate or harmless activity, it is actually a form of money laundering, and the individuals involved could face serious legal consequences.

Imagine you receive a message from someone claiming to be a recruiter offering you a part-time job. The role might involve transferring money from one account to another for “clients” of the business, making it sound legitimate. Once you accept, you’re asked to share your bank details or open a new account. Then, large sums of money start being transferred into your account, which you’re asked to forward to someone else, keeping a small percentage as your “wage.”

What’s really happening here is that your account is being used to launder money. The money moving through it could come from online fraud, scams, or other illegal activities, but since the funds briefly touch your account, it becomes harder for law enforcement to trace back to the original criminals.

Real-World Examples

1. Job Scams: People might be tricked into thinking they’re working a legitimate job when really they’re helping criminals move money. They could be told it’s a “payment processing” role or involve moving donations for charity.
2. Romance Scams: Some people, especially those targeted through online dating platforms, may be asked by a new “partner” to hold money for them. Feeling pressured to help, they agree and end up unwittingly becoming a money mule.
3. Student Offers: Young people, particularly students, are sometimes offered easy cash for opening new bank accounts or letting someone else use theirs. The prospect of easy money can be tempting, especially if they don’t fully understand what’s happening.

The People Most Likely to Become Money Mules

While anyone could be drawn into becoming a money mule, certain groups tend to be more at risk. These include:

• Young people and students: Many lack experience in handling financial matters and may be more easily swayed by the promise of quick cash, without realising the risks involved.  Nearly 23% of identified money mule accounts are held by people under the age of 21, and 65% by those under 30
• Vulnerable adults: This includes people in financial hardship or those facing difficulties such as unemployment or mounting debt. They might feel that they have no other option but to take up offers of easy money.
• Online daters: Those who are targeted in romance scams can be particularly vulnerable. Fraudsters often build emotional trust before asking for help, making the victim believe they’re doing a favour for someone they care about.
• Older Individuals: There is also a growing trend of people over 40 being recruited, with the number of accounts in this age group growing by 73% between 2023 and 2024

How Are Money Mules Recruited?

Criminals use various methods to recruit money mules, including:

• Social Media: Offers for “easy jobs” or “investment opportunities” may seem legitimate, but they are often fronts for illegal activity.
• Family and Friends: Some mules are recruited through acquaintances who are already involved in the scheme, sometimes unknowingly.
• Online Scams: Fraudsters posing as employers, investors, or even romantic partners may ask their targets to use their bank account to move money, falsely claiming it’s for a legal purpose​

How Many Money Mule Accounts Exist?

• In the UK, the number of money mule accounts has risen dramatically. In 2023, estimates suggest there were around 37,000 bank accounts displaying characteristics of money muling, contributing to the laundering of an estimated £10 billion annually​. 
• One of the largest banks in the UK, Lloyds, has uncovered more than 160,000 mule accounts since 2018, preventing over £114 million from being transferred to criminals

Consequences of Being a Money Mule

The repercussions for becoming a money mule are severe. Even if someone is unaware of the illegal nature of the transactions, they could face:

• Frozen Bank Accounts: Banks will freeze accounts involved in suspicious activity.
• Criminal Prosecution: Money mules can be prosecuted for facilitating money laundering.
• Long-Term Financial Damage: Being marked as a money mule can affect someone’s ability to open bank accounts, obtain credit, or secure a mortgage in the future

What to Do If You Think You’ve Become a Money Mule

If you’ve unwittingly participated in moving money, it’s crucial to act quickly. Here’s what you can do:

1. Stop immediately: Cease any involvement in transferring money or sharing your account details.
2. Contact your bank: Inform them of any suspicious activity related to your account. They may be able to help prevent further fraudulent transactions.
3. Report it to authorities: In the UK, you should report the matter to Action Fraud, the national fraud and cybercrime reporting centre.
4. Seek advice: Organisations like Citizens Advice and financial fraud prevention groups can provide guidance and support.

Help and Support

• Cifas: Cifas is a UK-based fraud prevention service that helps protect individuals from financial crime. You can learn more and find support on their website: www.cifas.org.uk
• The Children’s Society: They provide support for young people who may have been coerced into criminal activities such as money muling. More information and resources can be found at: www.childrenssociety.org.uk
• Action Fraud: This is the UK’s national reporting centre for fraud and cybercrime. You can report fraudulent activity or find assistance on their website: www.actionfraud.police.uk
• Your own Bank: Most banks in the UK offer fraud support and have dedicated teams to help customers affected by fraudulent activity, including money mule schemes. 

Preventing Money Mule Recruitment

Be cautious if anyone asks to use your bank account, even if the reason sounds legitimate. Always verify any company offering you employment, particularly if it involves handling funds. Fraudsters often work through legitimate-looking businesses or personal connections, so don’t let trust lead you into a trap.

Ultimately, money mule accounts enable criminals to operate across borders, making it harder for law enforcement to catch the actual perpetrators. If you’re ever in doubt about a financial offer, it’s always best to err on the side of caution.

Every year, we offer our clients Fee Protection Insurance, provided by Croner I. While the words “HMRC investigation” might send a chill down your spine (and make your wallet quiver), this insurance is your financial suit of armour, shielding you from the unexpected costs of defending yourself.

What is it?

In short, Fee Protection Insurance covers the professional fees incurred when HMRC decides to dive into your financial affairs. Whether you’re an SME or a personal tax client, an investigation can be time-consuming, expensive, and downright stressful. That’s where we come in—acting on your behalf to navigate the investigation, with our fees covered by the insurance.

Why do you need it?

HMRC isn’t a picky eater. They can target anyone, from the solo entrepreneur with a home office to a thriving business with staff and premises. And the worst part? You don’t have to have done anything wrong for them to start poking around.

Let’s say you run a small café, and HMRC suddenly wants to inspect your tax records. With Fee Protection Insurance, you won’t be hit with an unexpected bill from us for defending your case. Without it, though… well, let’s just say the costs of defending your tax position can pile up quicker than unpaid VAT!

Or perhaps you’re a personal tax client who made a few small investments. HMRC might want a closer look at your income sources, and before you know it, you’re knee-deep in paperwork. The insurance means we handle it all, without any surprise invoices to you.

Common Scenarios:

1. The Family Business: You’re the proud owner of a small manufacturing company. Everything is running smoothly until HMRC asks to review your payroll. Now you’re looking at hours of detailed questions and follow-up documents. No worries—this insurance covers our fees, and we handle the headache for you.
2. The Personal Tax Client: You’ve filed your tax return correctly, but HMRC has some questions about a rental property. Suddenly, you’re stuck in a whirlwind of letters and tax codes. With Fee Protection Insurance, we’ll step in, respond to HMRC, and ensure everything gets sorted—at no extra cost to you.

In short, Fee Protection Insurance gives you two very important things: expert support and the freedom to sleep well at night, knowing we’ve got you covered if HMRC decides to take an interest.

And that’s not all! With our Fee Protection Insurance scheme, clients also gain access to My Business Hub, a valuable Croner I product designed to make running your business smoother. Think of it as your all-in-one toolkit for HR, health & safety, and employment law advice—all just a click away.

What’s in the Hub?

My Business Hub is packed with resources tailored to SMEs. Need a quick contract template? Or perhaps some up-to-date health and safety guidance? It’s all there, neatly organised and ready to download. While this doesn’t replace the need for expert legal advice, it works alongside it, helping you stay on top of day-to-day compliance and management.

Why it helps:

Picture this: you’re expanding your team and need to brush up on your employment law obligations (workplace policies, anyone?). Or maybe there’s a looming health & safety audit, and you’re unsure where to start. My Business Hub offers comprehensive, expert-backed content to guide you through, complementing the legal support you rely on and saving you time, effort, and stress.

So, with our Fee Protection Insurance, not only are you covered for any HMRC surprises, but you’ve also got extra support to tackle other business challenges head-on. It’s a win-win!

Keep an eye out for our email landing in your inbox soon—the insurance is on an opt-in basis, and for those who haven’t taken advantage in the past, we’ll still offer it just in case your circumstances or mind have changed.

In the meantime if you have any questions then please contact Lucy@cga-york.co.uk

Ah, Home Responsibilities Protection (HRP), the gift from the government that’s meant to ensure your state pension isn’t left high and dry while you’re busy keeping the next generation alive. But like most gifts from the government, it’s wrapped in layers of bureaucracy, and just when you think you’ve got it unwrapped—surprise! You’ve missed out entirely.

What is Home Responsibilities Protection (HRP)?

Think of HRP as a virtual piggy bank for your state pension. If you’ve been at home raising children (or, let’s face it, trying to keep them from shoving Lego pieces up their noses), HRP steps in. It ensures that, even if you’re not paying National Insurance contributions while on parental duty, you’re still ticking off the boxes towards your state pension.

The Plot Thickens: A Blast from the Past

Now, just when you thought you had this HRP business figured out, HMRC drops a bombshell during Pensions Awareness week. Turns out, some parents who claimed Child Benefit before the year 2000 (yes, that far back) are missing out on State Pension payments they’re entitled to. It’s like finding out your vintage Pokemon cards are actually worth something!

Who’s Affected?

It’s mainly women at, or approaching, State Pension age. If you claimed Child Benefit between 1978 and 2000 and didn’t provide your National Insurance number (because why would you? It’s not like you were psychic), your HRP might be MIA.

What Can You Do?

1. Don’t panic (yet).

2. Check your eligibility on https://www.gov.uk/home-responsibilities-protection-hrp. It takes about 15 minutes, which is less time than it takes to convince a toddler to put on shoes.

3. If online isn’t your thing, you can claim by post using form CF411. How retro!

But Wait, There’s More!

For those of you thinking, “I’m too young for this nonsense,” hold onto your avocado toast. If you’ve had a baby in the past decade, you might be affected by the High Income Child Benefit Charge (HICBC) plot twist.

The HICBC Catch

In 2013, the government introduced HICBC, basically saying, “Hey, if one of you in the household earns over £50k, you don’t need Child Benefit.” This led to many higher-income parents skipping the claim altogether. Bad move!

Why It Matters

By not claiming Child Benefit, you’re not getting HRP credited either. You’re falling off the National Insurance radar faster than a toddler’s attention span.

The Solution

Even if you don’t *want* the Child Benefit, still *claim* it and then immediately “opt out” of the actual payments. It’s like ordering a salad at a fast-food joint – you probably won’t eat it, but at least you feel virtuous.

The Bottom Line

Whether you’re a vintage parent from the pre-2000 era or a millennial juggling avocados and baby wipes, check your HRP status. It could mean the difference between a comfortable retirement and one where you’re counting every penny.

Remember, you can check your National Insurance record online or via the free and secure HMRC app. It’s almost as addictive as doom-scrolling, but way more useful.

So, whether you’re wrangling toddlers or enjoying the peace of an empty nest, make sure the government’s doing its bit for your future. After all, one day, you’ll want to sit back, enjoy a cup of tea, and know you’ve done *everything* right—HRP included.

Until next time, keep an eye on those Lego pieces, check your pension status, and maybe, just maybe, you’ll find a pleasant surprise in your financial future!

*P.S. If you’re feeling overwhelmed, you can always call the National Insurance Helpline on 0300 200 3500. They’re like the tech support for your pension – minus the “have you tried turning it off and on again?”*

Hello, fellow entrepreneurs and parental units!

Are you tired of your kids lounging around the house, glued to their screens, while you slave away at your business? Well, have we got news for you! You can actually put those little bundles of joy to work – legally! But before you start drafting up contracts on the back of a cereal box, let’s dive into the do’s and don’ts of employing your offspring.

Age Matters (No, Really)

First things first, let’s talk age. If your child is under 13, I’m afraid they’ll have to stick to their day job of being adorable (unless they’re the next Shirley Temple – in which case, stage parents, rejoice!). For the 13-16 crowd, part-time work is on the menu. Full-time employment? That’s for the big kids who’ve hit 16 (or 17 in Scotland, because they like to be different).

Clock-Watching for Beginners

Now, don’t go thinking you can work them to the bone. During school term, it’s a maximum of 12 hours per week. Holidays are a bit more lenient:

13-14 year olds: 25 hours per week (That’s about 89,732 TikToks, for reference)

15-16 year olds: 35 hours per week (Approximately 3.5 Marvel movies)

And forget about those late-night shifts – work time is strictly 7am to 7pm. No working during school hours either, unless you fancy a chat with the truancy officer.

Breaks: Not Just for KitKats

Remember, these are kids, not machines. They need a 30-minute break every 4.5 hours, 14 hours of daily rest, and a whopping 2 days off per week. I know, I know, you’re thinking, “But that’s more rest than I get!” Welcome to parenthood, folks.

Safety First (Because Lawsuits Are No Fun)

Before you hand little Timmy that chainsaw, remember: you need to do a risk assessment. Some jobs are off-limits for kids. So maybe rethink that “Junior Crocodile Wrestler” position you had in mind.

Show Me the Money (But Not Too Much)

Here’s where it gets tricky. You need to pay them a fair wage for actual work done. No, making tea and liking your Instagram posts doesn’t count. Keep detailed records – HMRC loves a good paper trail.

The Taxman Cometh

Good news! You don’t pay employer National Insurance for under-21s, and the kids don’t pay it if they’re under 16. Plus, they have their own tax-free allowance (£12,570 for 2024/25). But remember, if you’re paying them more than a paper round wage, you might need to set up PAYE.

Dotting I’s and Crossing T’s

Have a proper contract, keep timesheets, and for heaven’s sake, pay them into a bank account, not with sweets or Pokémon cards. And while it’s tempting to shower them with perks, remember: HMRC might raise an eyebrow if your 14-year-old ‘intern’ is driving a company Porsche.

The Golden Rule

Here’s the kicker: the work must be real, necessary, and age-appropriate. So no, your 5-year-old can’t be your CEO, no matter how bossy they are at home.

In Conclusion

Hiring your kids can be a win-win. They learn valuable skills, you get help, and family time gets a whole new meaning. Just remember to keep it legal, keep it safe, and for the love of all that is holy, keep detailed records.

And if all this sounds more complicated than assembling flat-pack furniture while blindfolded, don’t worry. That’s what accountants are for. They love this stuff. Seriously, it’s like catnip to them.

Happy hiring, and may the force (and HMRC) be with you!

Listen up, folks! If you’re 55 or older and have been putting off writing your will (we see you, procrastinators), October is your month to shine.

Let’s face it, folks. None of us are itching to spend our precious time thinking about wills. It’s like being asked to choose your favourite dentist – not exactly a fun task. But, while we might prefer to avoid the subject, making a will is one of those things that just needs doing. Why? Because when the inevitable comes knocking, you want to make sure your beloved collection of antique teapots (or, you know, your hard-earned estate) goes to the right people (or maybe a teapot-loving charity).

What’s This Free Wills Month Business?

Free Wills Month is like Black Friday for responsible adults. From October 1st, 2024, a group of charities are offering people aged 55 and over the chance to have their simple Wills written or updated for free. Yes, you read that right – FREE. It’s like finding money in your old coat pocket, but better!

Why You Need a Will – No Excuses!

Imagine this: You’ve got no will, and you’ve just popped off on your eternal holiday. Your family is now not only dealing with the shock of your sudden exit, but they’ve also got piles of paperwork, headaches, and disputes over who gets that vintage footstool you insisted was “worth something.”

With a will, you can:

• Make sure your money, possessions, and random treasures end up with the people you want them to.
• Save your family from stress, arguments, and hours of Googling probate jargon.
• Even donate to a cause you love.
• Avoid having your estate eaten away by tax or probate costs (always fun to beat the system, right?).

How Does It Work?

It’s simple:

1. Contact a participating solicitor during October.

2. Book an appointment (they’re limited, so don’t snooze on this!).

3. Get your Will sorted by a professional.

Now, here’s where it gets interesting. While you’re under no obligation to leave a gift to charity in your Will, many people see this as a chance to help their favourite cause. For example, you could choose to support St Leonard’s Hospice – a local charity that does incredible work.

St Leonard’s Hospice: A Shining Example

Speaking of St Leonard’s, let’s talk about how you can support them through this process. Normally, they run their own “Make a Will Month” in October, where local solicitors help you write a Will in exchange for a donation to the hospice. 

Here’s an idea: Why not combine the two? You could use the Free Wills Month service to get your Will sorted, then make a donation to St Leonard’s Hospice equivalent to what you would have paid for the Will. It’s like getting a two-for-one deal on good deeds!

Suggested donations (based on St Leonard’s usual scheme):

* £90 for a single will (perfect for those planning to leave everything to their cat).

* £180 for a mirror will (for couples who finish each other’s sentences and now want matching Wills).

Remember, the donation is entirely up to you – we’re not here to judge!

There are of course, many, many worthy charities to consider but as this is our newsletter then of course I use St Leonards as my shining example as this is one of our chosen charities along with https://www.macmillanyork.com/ and https://yorkwomenscounselling.org/ 

What About Powers of Attorney? Do I Need One of Those Too?

Ah, the often-overlooked Power of Attorney – the Batman to your will’s Robin. It is like having a stunt double for your life decisions. This little beauty gives someone you trust the power to make decisions on your behalf if you can’t. Whether it’s about your health or your finances, it’s essential. We all hope never to need it, but if you do, you’ll thank your younger self for setting it up. Imagine leaving your life decisions in the hands of someone you barely know – better to have a trusted mate handling things if you’re out of action.

Ready to Take the Plunge?

Don’t let this opportunity slip through your fingers like sand through an hourglass (too dramatic?). Head over to the Free Wills Month website to get started. Remember, appointments are limited and allocated on a first-come, first-served basis. Once they’re gone, they’re gone – just like youth and your ability to read without glasses.

Don’t delay – October is your month to tick this task off your list. Not only will you feel virtuous for finally getting around to it, but you could also be helping wonderful charities in the process. So, no more excuses – time to secure your spot and get Will-ing!

P.S. If you’re one of those “I’ll do it next month” people, we’ve got our eye on you. October only comes once a year, you know!

Fasten your seatbelts and adjust your mirrors, because we’re about to take you on a wild ride through the labyrinth of UK company car tax legislation! Whether you’re eyeing that shiny Porsche or considering a more practical approach, we’ve got the roadmap to help you navigate these treacherous financial highways.

The Company Car Conundrum: A Comedy in Four Acts

Act 1: The Personal Use Paradox

Picture this: Your company buys you a car. You swear on a stack of MOT certificates that it’s “just for business.” But HMRC isn’t buying your Oscar-worthy performance. They know you’ll be using it personally, even if it’s just to pop to the shops for a Freddo. The degree of personal use is as irrelevant as last year’s road tax payment – it’s happening, and that’s that.

Act 2: The Pool Car Pipe Dream

“Aha!” you think, “I’ll just call it a pool car!” Nice try, but unless you’re planning to park it at the office every night (and we know you’re not), that’s about as likely as finding a unicorn in your garage. A pool car needs to be available to all employees, used only for business, and not kept at anyone’s home overnight. So unless you’re running a 24/7 taxi service for your employees, that’s probably not going to fly.

Act 3: The “No Personal Use” Comedy Sketch

You could create a company policy prohibiting personal use, but let’s be real – that’s about as effective as a chocolate teapot. Plus, if you actually followed it, you’d need to insure the car to exclude personal use. Imagine explaining to the police why you’re not insured for your weekend trip to Tesco!

Act 4: The Tax Man Cometh

Now, let’s break down the tax implications of your vehicular dreams:

1. The £20K “Bargain” Porsche Cayman
   • Corporation Tax: 6% writing down allowance per year. It’s like watching paint dry, but less exciting.
   • Personal Tax: Based on the original list price (£50,000) and CO2 emissions. For a gas-guzzler, you could be looking at a benefit value of 37% of £50,000 = £18,500. If you’re a higher rate taxpayer, that’s £7,400 in extra tax per year. Ouch!
   • Class 1A NI: The company pays 13.8% on the benefit value. Another £2,553 per year.
   • VAT: If the company is VAT registered, it can’t reclaim the VAT on the purchase. It’s like buying a round for HMRC.
2. The Brand New £60K Porsche
   • Same rules apply, but bigger numbers. Benefit in kind could be 37% of £60,000 = £22,200. That’s £8,880 in personal tax for a higher rate taxpayer, and £3,063.60 in Class 1A NI for the company. The tax man is the only one getting a joyride here!
3. Buying Outright vs Finance
   • Tax treatment is largely the same. The benefit in kind is still based on the list price. With finance, the company might get tax relief on interest payments. It’s like finding a fiver in your pocket, but the taxman takes four quid.
4. Leasing
   • Lease payments are generally deductible expenses for the company (with some restrictions for high-emission cars).
   • You still get hit with the benefit in kind charge based on the car’s list price.
   • Silver lining: The company can reclaim 50% of the VAT on lease payments. It’s not quite winning the lottery, but we’ll take what we can get!
5. The Electric Avenue
   • 100% first-year allowance on the full cost of the car for the company. Now we’re talking!
   • Benefit in kind rate is just 2% of the list price for 2024/25. On a £60,000 electric car, that’s £480 in tax per year for a higher rate taxpayer. It’s like finding a loophole in the Matrix!
   • The company pays just £165.60 per year in Class 1A NI.
   • VAT: Still can’t reclaim it on a car available for private use, unless it’s leased (then 50% is reclaimable).
6. The Van Plan
   • 100% Annual Investment Allowance available for the company.
   • If there’s insignificant private use, there’s no benefit in kind. If there is private use, it’s a flat rate benefit of £3,960 for 2024/25.
   • VAT is fully reclaimable if it’s a genuine commercial vehicle with only insignificant private use.

The Fuel on the Fire: Company-Provided Fuel

Think the company paying for your fuel is the cherry on top? Think again!

1. For Cars: There’s an additional benefit in kind. For our £60K Porsche with a 37% CO2 percentage, that’s a fuel benefit of £10,286. A higher-rate taxpayer would pay £4,114.40 in tax on this. The company also pays Class 1A NI of £1,419.47. It’s like paying for an all-you-can-eat buffet when you’re on a diet!
2. For Electric Cars: Good news! Electricity isn’t considered “fuel” for this purpose. So if the company pays to charge your electric car, including at home, there’s no fuel benefit. It’s the tax equivalent of having your cake and eating it too!
3. For Vans: There’s a flat rate fuel benefit of £757 for 2024/25. It’s like a fixed-price menu for your fuel benefit!

Remember, these fuel benefits apply on an “all or nothing” basis. Even if the company pays for one private mile, you’re hit with the full whack. It’s the tax equivalent of “you break it, you bought it”!

The DIY Approach: Your Car, Company’s Mileage

Not keen on the company car circus? Here’s another route:

1. How It Works: You buy the car, the company reimburses you for business miles. It’s like Uber, but you’re both the driver and the passenger!
2. The Rates: HMRC’s Approved Mileage Allowance Payments (AMAPs) for 2024/25 are:
   • First 10,000 miles: 45p per mile
   • Over 10,000 miles: 25p per mile For a 20,000 mile year, that’s £6,500 tax-free. Not too shabby!
3. Tax Implications:
   • For You: If the company pays you at or below these rates, it’s tax-free. It’s like finding money in your pocket, but HMRC put it there!
   • For the Company: The mileage payments are a deductible expense.
4. Record Keeping: You’ll need to keep a log of your business miles. Think of it as a fitness tracker, but for your car.

The Plot Twist: Company Car, Personal Fuel

Want a company car but don’t fancy the fuel benefit? You can have your cake and eat it (sort of):

1. The Setup: You get a company car, but pay for all fuel personally.
2. The Payoff: You can claim the advisory fuel rates for business mileage, and the company can reclaim the VAT on these rates.
3. The Catch: The amounts aren’t very exciting. It’s like getting a participation trophy in the tax Olympics.

But What About VAT?

Ah, VAT. The uninvited guest at every financial party The plot twist in our financial soap opera. Here’s the real scoop:

1. Can You Reclaim VAT?: Hold onto your steering wheels, because yes, you can reclaim some VAT! But like a GPS on a country lane, it’s a bit complicated.
2. The Fuel Element: HMRC, in its benevolence, allows companies to reclaim VAT on the fuel element of mileage claims. It’s like finding a secret compartment in your car that dispenses tax refunds!
3. How It Works:
   • HMRC publishes advisory fuel rates, which represent the fuel element of your journey.
   • These rates vary based on engine size and fuel type, and are updated quarterly. It’s like a ever-changing menu of tax savings!
   • You can reclaim the VAT fraction of these fuel rates.
4. The Math: Let’s say the advisory fuel rate for your gas-guzzling beast is 17p per mile. The VAT element would be 17p x 1/6 = 2.83p per mile. For a 10,000 mile year, that’s £283 of VAT you can reclaim. Not exactly winning the lottery, but hey, every little helps!
5. The Catch: The company can only reclaim this VAT if it’s VAT registered, and the journey was for business purposes. No sneaking in your weekend trips to the beach!

The Grand Finale: Selling the Company Car

Here’s the encore you didn’t ask for: When the company sells a vehicle it claimed 100% tax allowances on, it’ll have to repay the tax on the sales price to HMRC. It’s like the taxman’s version of a goodbye kiss!

The Bottom Line

Whether you go for a company car, buy your own, or decide to commute by unicycle, each option has its tax twists and turns. The key is finding the route that doesn’t drive your finances off a cliff.

Remember, in the world of company cars, what looks like a shortcut often turns out to be the scenic route to HMRC’s doorstep. Drive safely and may your tax bill ever be in your favour!

P.S. If all this has left your head spinning faster than a Porsche’s wheels, don’t worry – that’s what we’re here for. Just give us a call, and we’ll help you navigate these treacherous tax waters, but hopefully from the above you will understand that it helps you have a clear idea of the boat you want to sail in.   Hmmm there’s an idea for another article – The company boat………………

https://www.tax.service.gov.uk/guidance/work-out-company-car-and-fuel-benefit

The world of VAT and vouchers continues to puzzle both taxpayers and HMRC, as demonstrated by two recent cases that, despite appearing similar, ended with very different outcomes.

A Quick Background

The confusion around how vouchers should be treated for VAT purposes isn’t new. Back in 2016, a decision by the Court of Justice of the European Union (CJEU) highlighted the inconsistent VAT treatment of vouchers across Europe. This led to the introduction of the VAT Vouchers Directive, which came into full effect in the UK on 1 January 2019.

So, what exactly is a voucher? According to UK law, a voucher is an instrument—physical or electronic—that must be accepted as payment for goods or services. Importantly, it must have terms that limit the value of what can be bought with it, and it needs to be transferable as a gift. Some things, like discount coupons, tickets, and postage stamps, are specifically excluded from being classified as vouchers.

When is VAT Due?

Normally, VAT is due when goods are delivered or services are provided. However, things get tricky with vouchers. If a voucher is used to buy something in the future, you might think VAT should be paid when the voucher is bought. But it’s not always clear how much VAT will be due until the voucher is actually used—especially if it can be redeemed for goods or services with different VAT rates.

To tackle this, VAT law identifies two types of vouchers:

1. Single-Purpose Vouchers: If all the items the voucher can be used for have the same VAT rate, VAT is due when the voucher is issued and whenever it’s transferred for payment.
2. Multi-Purpose Vouchers: If the voucher can be used for items with different VAT rates, VAT isn’t charged until the voucher is redeemed.

The Issue of Tax Leakage

Here’s a key point: if a multi-purpose voucher is never redeemed, some of the money received for it may escape VAT entirely. This potential “tax leakage” wasn’t a huge concern initially, but it has become more significant as the use of vouchers has evolved.

The Go City Case

Go City Ltd (GCL) found itself at the center of this debate. GCL sells sightseeing passes that give access to various attractions. After discussions with HMRC in 2019, GCL changed their system so that customers bought credits, which could be redeemed at attractions. The question was: are these credits vouchers?

The First-tier Tribunal (FTT) decided that the credits weren’t tickets (which are excluded from the definition of vouchers). Instead, they were multi-purpose vouchers. VAT would only be due when the credits were used, not when they were purchased.

The Lycamobile Case

In contrast, Lycamobile, a telecom provider, sold plan bundles that included calls, texts, and data allowances. Lycamobile argued that VAT shouldn’t be due when customers bought these plans because it wasn’t clear at that point what services would be used. However, the FTT ruled that the purchase of the plan itself was the taxable event, not the actual usage of the allowances. The allowances were considered a single-purpose voucher, and VAT was due when the plan was purchased.

Conclusion

Although both cases dealt with vouchers and cited similar legal precedents, the outcomes were different because the nature of what was being supplied was fundamentally different in each case. As these cases show, understanding the exact nature of the supply is crucial in determining the correct VAT treatment.

Although the tone of the Chancellor was very upbeat, the reality of the budget was clearly “steady as we go” against the backdrop of financial market jitters, the continuing conflict in Ukraine and a looming election.  Critic or supporter – perhaps that very much depends on the extent to which the (lengthy) budget represents a return to sensible policy?  

The majority of the key tax-raising measures announced by the Chancellor in his Autumn Statement also take effect from April 2023. The main revenue raising strategy is to freeze various tax allowances, including the Income Tax Personal Allowance and the VAT threshold. With inflation climbing to over 10%, the government receives its own windfall in terms of VAT receipts. The decision to reduce the additional (upper) rate threshold next year means that more taxpayers will pay tax at the 45% rate, thus spreading some of the tax burden, as anticipated, to higher earners.

Looking at the position of the ‘private client’ there is some bad news in the form of a reduction in the tax-free allowances for both Dividend Tax and Capital Gains Tax (CGT) over the next two years. The Chancellor has also extended the scope of a windfall tax on the energy sector. There are always winners and losers, and online businesses might breathe a sigh of relief that the government has decided not to introduce an online sales tax. Meanwhile, reforming measures for business rates continue to evolve, with a new form of small business rate relief planned to protect certain businesses from the large increase to bills that may well occur thanks to the update in rateable values of all non-domestic properties in England to reflect their value as at 1 April 2021.

Combined with the many mini-budgets and statements made towards the end of 2022, this Budget brings change; good, bad, and often to be determined with time. What is clear is that 2023 remains a year of opportunity and we are here to work alongside you and help you grow

What about the cost of living?

Energy Costs

The Energy Price Guarantee (EPG) brings a typical household energy bill in Great Britain down to around £2,500 per year. It has now been announced that the £2,500 EPG will be extended by 3 months to 30th June 2023, before increasing to £3,000 until the end of the EPG period on 31 March 2024. This extra 3 months at £2,500 will be worth £160 for a typical household.

A new scheme for businesses, charities and the public sector has been confirmed. The Business Energy Bills Discount Scheme will run until 31 March 2024, giving non-domestic customers discounts on their gas and electricity bills.

Childcare

Additional support is being provided towards childcare costs in what the government describes as a ‘childcare revolution’. This includes 30 hours of free childcare for every child over the age of 9 months, with support being phased in until every eligible working parent of under 5s gets this support by September 2025.

For Universal Credit claimants, the government will also pay childcare costs in advance rather than arrears, when parents move into work or increase their hours. The maximum they can claim will also be boosted to £951 for one child and £1,630 for two children, an increase of around 50%.

Benefits and State Pension

As confirmed at Autumn Statement 2022, the government will also increase benefits, including the State Pension, paid to recipients in the tax year to 5 April 2024, by 10.1%. 

This increase in the State Pension means that most pensioners will receive £10,600 in 2023/24, where they have 35 qualifying years. We urge you again to check your contribution record on your Government Gateway account and consider making Class 3 voluntary National Insurance (NI) contributions in respect of missing qualifying years. Normally it is only possible to make voluntary NI contributions for the past 6 tax years, but until 31 July 2023, it is possible to go back as far as 6 April 2006 and pay additional contributions at the 2022/23 Class 3 rate of £15.85 per week. 

In-year Class 3 contributions for 2023/24 will increase to £17.45 per week.

Duties on fuel frozen

The proposed 11p rise in fuel duty will be cancelled thus maintaining last year’s 5p cut for another 12-months.

Draught Relief

Draught Relief has also been significantly extended from 5% to 9.2%, so that the duty on an average draught pint of beer served in a pub, from 1 August 2023, will be up to 11 pence lower than the duty in supermarkets. The commitment to duty on a pub pint being lower than the supermarket has been termed the “Brexit Pubs Guarantee” by the Chancellor, and this change will also be enjoyed by every pub in Northern Ireland thanks to the Windsor Framework.

What about income tax?

It’s not so much that taxes are increasing but rather than more is being taxed

Increasing Liabilities

The personal allowance and basic rate band threshold are now frozen in place until 5 April 2028. As earnings increase, individuals will move into higher tax bands. This is often referred to as ‘fiscal drag’ because it will raise more tax without the government increasing income tax rates.

The personal allowance continues to be partially and then fully withdrawn for higher earners, with £1 of personal allowance lost for every £2 of adjusted net income over £100,000. 

Other Allowances 

Savings income continues to benefit from a personal savings allowance of £1,000 for basic rate taxpayers and £500 for higher rate taxpayers. Dividend income attracts a £1,000 dividend allowance in 2023/24, down from the £2,000 allowance seen in previous years. These allowances are in addition to the personal allowance and attract a 0% rate of income tax. 

For those living in Scotland and classed as Scottish taxpayers have a slightly different banding system for ‘other income’ (non-savings, non-dividend) as follows: 

The application of income tax to savings and dividends income is the same as for the rest of the UK.

Pension Tax Relief

There was good news in the Budget for those saving in a personal pension. The current pension lifetime allowance (LTA) charge is being abolished from 6 April 2023, although the actual change to the Lifetime allowance doesn’t take effect until April 2024.   

Individuals may be able to receive 25% of their pension savings as a tax-free lump sum when they become entitled to their pension benefits. This is currently capped at 25% of the LTA and going forwards, for most individuals, will remain capped at £268,275, despite the planned change in the level of the Lifetime Allowance.

The pension Annual Allowance (AA) increases from £40,000 to £60,000 from 6 April 2023. The AA applies to the combined pension input by the individual and, in the case of employees, their employer. Pension contributions in excess of the AA result in a tax charge on the individual, although they may take advantage of unused AA amounts from the 3 previous tax years. 

For those with high incomes, the AA is tapered. From 6 April 2023, where a taxpayer’s adjusted income exceeds £260,000 (increasing from £240,000), the AA is tapered by £1 for every £2 in excess of £260,000, down to a minimum of £10,000 (increasing from £4,000).

The Money Purchase Annual Allowance (MPAA) replaces the AA when an individual starts to flexibly access a defined contribution pension scheme. The MPAA will increase from £4,000 to £10,000 on 6 April 2023. 

Tax Efficient Savings

There were no changes to the annual limits for Individual Savings Accounts (ISAs), Child Trust Funds or the Junior ISA. These limits remain at £20,000, £9,000 and £9,000 respectively.

What about other taxes?

Capital Gains Tax

In the Autumn Statement, the Chancellor announced that the £12,300 annual tax-free capital gains tax exemption (or allowance) will be reduced to just £6,000 in 2023/24 and only £3,000 in 2024/25.

This change will mean that those disposing of capital assets will pay more tax, where the new lower allowance is exceeded.

Couples who are in the process of separating, or who have commenced divorce proceedings, need to be aware of new rules taking effect from 6 April 2023 concerning the transfer of capital assets between them as a result of their separation.  

If you are planning any capital disposals, please contact us to discuss the best strategy for the disposal.

Inheritance Tax

In the 2023 Autumn Statement, the inheritance tax nil rate band was frozen at £325,000 until April 2028. The residence nil rate band will also remain at £175,000 and the residence nil rate band taper will continue to start at £2 million.

VAT

The VAT registration and deregistration thresholds continue to be frozen at £85,000 and £83,000 respectively, instead of increasing each year in line with inflation. This will remain the case until March 2026.

Since 1 January 2023, a new penalty regime has been in operation for late VAT return submission and late payment of VAT. The new system is designed to target more persistent offenders, with penalties escalating quickly where defaults reoccur.

Business Taxes

National Insurance Contributions (NIC) for the self-employed in 2023/24

Self-employed individuals are required to pay Class 2 and Class 4 NICs if their profits exceed £12,570. These NICs are usually collected with the individual’s income tax self-assessment payments.

For 2023/24, Class 2 NICs are calculated at £3.45 per week and Class 4 NICs are calculated at 9% on profits between £12,570 and £50,750, and at 2% on profits over £50,750.

Tax Relief for expenditure on plant and machinery

The Annual Investment Allowance (AIA), giving 100% tax relief to unincorporated businesses and companies investing in qualifying plant and machinery, is now permanently set at £1million.

The super-deduction, which gives enhanced 130% relief for new qualifying plant and machinery acquired by companies, will end on 31 March 2023. 

As a replacement for the super-deduction, ‘full expensing’ (effectively 100% tax relief, called a ‘First Year Allowance’ (FYA)) will be available to companies (not unincorporated businesses) incurring expenditure on new qualifying plant and machinery between 1 April 2023 and 31 March 2026. The qualifying criteria is quite broad although there are exclusions, including cars and features integral to a building (for example, heating systems). With regard to ‘integral features’, a smaller 50% FYA will be available. Subsequent disposals of assets on which one of these FYAs has been claimed will trigger a clawback of tax relief at a rate of 100% or 50% of the disposal proceeds, depending on the rate of the original relief. These new FYAs will mainly be of interest to companies that have already fully utilised their £1million AIA.

The separate 100% FYA for electric vehicle charge points remains available for unincorporated businesses and companies until Spring 2025.

This announcement will have very little impact on the majority of businesses and it should be remembered that these allowances do not increase the tax relief available but simply accelerates it – this is more about cashflow planning.

Corporate Taxes

New rates from 1 April 2023

From 1 April 2023, the rate of Corporation Tax will increase to 25% if a company’s profits exceed £250,000 a year. The current 19% rate will however continue to apply where profits are no more than £50,000 a year. 

Where a company’s profits fall between £50,000 and £250,000 a year, the profits are taxed at the higher 25% rate, but a ‘marginal relief’ is given to reduce the liability, with the effective rate being closer to 19% for those with profits just over £50,000. 

Companies in the same corporate group (or otherwise connected by association) must share the £50,000 and £250,000 thresholds between them, making the 25% rate more likely to apply.  We will discuss the implication of associated companies in a future newsletter.

Research & Development (R&D) Reliefs

From 1 April 2023 a raft of changes is coming to the R&D tax relief regime and claimant companies should consider obtaining updated advice if they’ve not already done so. The key changes are:

• For SME companies, R&D tax relief rates will be reduced from 230% to 186%. 
• For loss-making SME companies, the current payable credit of 14.5% will only be available for companies whose R&D expenditure constitutes at least 40% of their total expenditure. For R&D claimants that don’t meet the new 40% test, the payable credit will be reduced from 14.5% to 10% of the eligible loss.
• Qualifying R&D expenditure will be expanded to include data licences and cloud computing services.
• New claimants (those who have not made a claim in the previous 3 years) will be required to inform HMRC of their intention to make a R&D claim within 6 months of the end of the accounting period to which the claim relates. 

From 1 August 2023, additional information requirements will need to be fulfilled when making a R&D claim.

A £500 million per year package of support for 20,000 research and development (R&D) intensive businesses through changes to R&D tax credits was announced. In full, the Chancellor’s announced changes in this important area are:

• The scheme is targeted specifically at loss making R&D intensive SMEs. Focusing support towards those most impacted by the rate changes introduced at Autumn Statement 2022.
• A company is considered R&D intensive where its qualifying R&D expenditure is worth 40% or more of its total expenditure.
• Eligible loss-making companies will be able to claim £27 from HMRC for every £100 of R&D investment, instead of £18.60 for non-R&D intensive loss makers.
• Around 1,000 claiming companies will come from the pharmaceutical and life sciences industry. This will support the development of life saving medicines.
• Around 4,000 digital SMEs will be from the computer programming, consultancy, and related activities sector. This will support the development of AI, machine learning and other digital based technologies.
• Around 3,000 other manufacturing firms, and another 3,000 professional, scientific, and technical activities firms will also qualify for the enhanced support.
• This builds on previously announced changes to support modern research methods by expanding the scope of qualifying expenditure for R&D reliefs to include data & cloud computing costs.

The permanent increase from 13% to 20% for the R&D Expenditure Credit rate announced at Autumn Statement 2022 also means the UK now has the joint highest uncapped headline rate of tax relief in the G7 for large companies

Creative industries tax reliefs

The government continues to support the creative industries by reforming and enhancing film, TV and video games tax reliefs. The government will also extend the temporary higher rates of theatre, orchestra, and museums and galleries tax reliefs for 2 further years until April 2025.

Employment Taxes

• National Insurance Contributions (NICs)

Like the main income tax bandings, employer and employee NIC thresholds are now also frozen until 5 April 2028. This broadly means that employers’ NIC will continue to apply at 13.8% to earnings in excess of £9,100 a year (£175 per week) and employees will continue to pay 12% on earnings between £12,570 and £50,270 and 2% thereafter.

• Company Cars and Other Benefits

Employees are required to pay income tax on certain non-cash benefits. For example, the provision of a company car constitutes a taxable ‘benefit in kind’. Employers also pay Class 1A NIC at 13.8% on the value of benefits.

The set percentages used to calculate company car benefits are fixed until 5 April 2025 before slight increases apply to most car types, including electronic and ultra-low emission, from 6 April 2025.

More imminently, the figures used to calculate benefits-in-kind on employer-provided vans, van fuel (for private journeys in company vans), and car fuel (for private journeys in company cars) will increase in line with the Consumer Price Index (CPI) from 6 April 2023. These will become:

• Van benefit £3,960
• Van fuel benefit £757
• Car fuel benefit multiplier £27,800

Investment Zones

The Government will establish 12 ‘Investment Zones’ across the UK, including a promise to have at least one each in Scotland, Northern Ireland and Wales. 

Each successful zone will have access to £80m funding over 5 years and benefit from a package of tax reliefs. These include relief from Stamp Duty Land Tax (SDLT), enhanced capital allowances for plant and machinery, enhanced structures and buildings allowances and relief from secondary Class 1 National Insurance Contributions (NICs) for qualifying employers on the earnings of eligible employees up to £25,000 per annum. 

Venture Capital Schemes

The Government is increasing the generosity and availability of the Seed Enterprise Investment Scheme for start-up companies. The amount of investment that companies will be able to raise under the scheme will increase from £150,000 to £250,000. The gross asset limit will be increased from £200,000 to £350,000 and the investment must be made within 3 years (increased from 2 years) of trade commencing. In a bid to support these changes, the annual investor limit will be doubled to £200,000. The changes take effect from 6^th April 2023.

Simplifying the tax system

Changes to simplify the tax system of the UK were underlined by a number of changes to positively impact the lives of small business owners. They are:

• Changes to the Enterprise Management Incentives (EMI) scheme from April 2023 to simplify the process to grant options and reduce the administrative burden on participating companies. This includes, from 6 April 2023, removing requirements to sign a working time declaration and setting out details of share restrictions in option agreements.
• Delivery of IT systems to enable tax agents to payroll benefits in kind on behalf of their clients – allowing agents to better support their clients and reducing burdens on employers.
• The government will extend the Help to Save scheme by 18-months, on its current terms, until April 2025. A consultation will also be launched on longer terms options for the scheme.
• Measures to simplify the customs import and export processes, including improvements to the Simplified Customs Declaration Process, and the Modernising Authorisations project.

From 1 April 2023, the following increases to NMW/NLW will come into force:

The increases apply in the next ‘pay reference period’ after the increase. For example, if X gets paid on the 15th of the month, the old rate applies until the 15th, and the new one from the 16th. To avoid misunderstandings, you might want to explain this to your staff.

Falling foul of the law

The consequences of failing to pay NMW/NLW can be costly:

• fines at 200% of arrears (reduced to 100% if paid within 14 days, subject to a maximum of £20,000 per unpaid worker);
• repayment of arrears, calculated at the current rate of NMW/NLW;
• criminal proceedings for the most serious breaches.

Common mistakes

Keeping up with entitlement

16% of those publicly ‘named and shamed’ by the government for breaching the NMW/NLW blamed failing to increase pay in line with entitlement. You should therefore be careful to keep on top of employee birthdays.

If you employ apprentices, that rate is only paid in the first year; thereafter, only to those under 19. Your should be aware of when they:

• move into year two (if 19 and over);
• turn 19 (after year one); and
• finish their apprenticeship.

These events mean they must be paid the appropriate NMW/NLW rate from the next ‘pay period’.

As of 1 July 2021, there are changes to the way VAT is handled for online sales from businesses worldwide to consumers (that is, B2C) in the European Union (EU).

The goal is to make life much easier for those eCommerce businesses selling to consumers across the EU’s national borders, and thereby facilitating trade.

The changes can be utilised by businesses outside of the EU, including the UK.

The changes are commonly referred to as the EU VAT E-commerce Package and the two key components are One Stop Shop (OSS) and Import One Stop Shop (IOSS).

Any business that has been using the Mini One-Stop-Shop (MOSS) for certain kinds of digital services will already know of the benefits of this kind of simplification.

The new measures extend MOSS by opening it up to more services and also goods including those imported into the EU, thereby potentially simplifying VAT for many more kinds of sales.

It should be noted from the start that neither OSS nor IOSS are mandatory.

As an alternative, businesses can register for and then both account for and pay VAT in each of the EU countries in which they sell to consumers.

This is administratively onerous, of course, and is one of the reasons why OSS and IOSS were created.

It should also be noted that these new VAT measures are limited to online sales to consumers in the EU.

Business to business (B2B) sales from a business in the UK to a business in an EU country continue as they have following the end of the Brexit transition period. on 1 January 2021, which is to say, B2B sales of services are generally subject to the reverse charge.

Exports of goods should be zero rated, and are then subject to tax in the destination country through the application of import VAT.